The Federal Government is poised to aggressively increase its tax-to-GDP ratio from under 10 per cent to a minimum of 18 per cent within the next three years, according to the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele.
Speaking on Aise TV on Thursday, Oyedele asserted that the ambitious target will be achieved through sweeping tax reforms recently signed into law by President Bola Tinubu.
These new laws, he explained, are designed not just to boost government revenue but also to correct deep-seated inefficiencies and foster fairness within Nigeria’s tax system.
He said, “Today, the Nigerian economy, it’s in the region of maybe 270 to 300 trillion naira. Not big enough. But when it comes to the tax yield, it’s even very embarrassing. Until last year, we were doing under 10%. South Africa is doing 26%. Some more developed countries are doing 30, 34, 40, like France. So the yield has been so small. And when we did our analysis, what we found was the tax gap. The difference between what we are collecting and what we could be collecting, is as high as 70%. Now, that gives you two major challenges. On one hand, it means you’re not collecting the revenue you should be collecting. On the other hand, it means you are rewarding the people who are evading taxes because some are paying. So we needed to fix that.
In the design of the tax bills, now tax laws, what we have put there are measures to make it more difficult, more costly for you to evade taxes and a lot easier for you to do the right thing. So with that, without raising taxes on people, we think that we can close that gap by more than half and therefore double Nigeria’s tax revenue. This is the reason why we’re so comfortable and confident that we can raise Nigeria’s tax to GDP ratio from under 10% to a minimum of 18% within three years.”
The new tax laws include the Nigeria Tax Bill, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Bill.
One of the most transformative provisions is the exemption of Nigerians earning less than ₦1 million annually from paying personal income tax. Previously, citizens earning as little as ₦300,000 were taxed as much as 7%.
He said, “One of its central provisions is that people who don’t earn up to a million naira a year will no longer pay income tax. Before now, people who earned as little as 300,000 naira a year used to pay up to 7% income tax. The other notable provision is that small businesses whose gross turnover is not up to 50 million naira a year will not pay company income tax. corporate income tax is now set at 30% and value added tax or VAT is now 7.5%. There’ll be no VAT on essential items like food education and health care. VAT is also exempted from things like rent and public transport.”
Beyond plugging revenue gaps, Oyedele said the broader goal is to rebuild citizens’ trust in government through accountability.
He noted, “People will say, ‘after collecting the revenue, so what?’ So our reforms also address the application of tax revenue and other revenues of government, including enhancing transparency and accountability. Almost like a reset of the social contract, so Nigeria can work for Nigerians.”
Oyedele also acknowledged that the reforms should have happened decades ago, but credited President Tinubu for showing rare political courage in pushing them through despite intense backlash.
“The need for the reform, and this should have been done like 30 years ago. That’s why I’ll give the credit to the president again and again. This is a real demonstration of political will, courage and character because this thing got so heated at some point and people were calling him all manner of names. Some of the things we demanded for, he didn’t even know we put them in those bills. He took all of that. There was not a moment that he blamed us for anything”, he said.
